Black Hills Corp. (NYSE: BKH) utility subsidiary Black Hills Power today received approval from the South Dakota Public Utilities Commission of a settlement agreement that allows the company to increase its electric revenues in South Dakota.
The agreement between Black Hills Power and PUC Commission staff completes proceedings in the rate request Black Hills filed with the PUC in March 2014, and permits the utility to increase electric rates for its 65,500 customers in South Dakota on April 1, 2015.
The new rates will generate an estimated $6.89 million in additional annual revenue. The settlement does not stipulate return on equity and capital structure.
The PUC decision allows Black Hills Power to recover operating expenses and infrastructure investments, chiefly for its portion of the natural gas-fired Cheyenne Prairie Generating Station in Cheyenne, Wyo., and related infrastructure serving the utility's South Dakota customers.
"Our goal is to provide safe, reliable, cost-effective energy for our customers, while delivering an appropriate return for our investors," said Linn Evans, Black Hills Corp.'s president and chief operating officer of utilities.
The 132-megawatt Cheyenne Prairie Generating Station was built for less than the budgeted amount and was placed into commercial operation, as scheduled, on Oct. 1.
The new facility was necessary to replace a portion of the generation capacity of Black Hills Power's Osage and Neil Simpson I plants in Wyoming, and the Ben French plant in South Dakota. Those three coal-fired plants, which had been in service for an average of more than 50 years, were retired in March 2014 to comply with new Environmental Protection Agency air emissions regulations.
"The Cheyenne Prairie station will produce immediate and long-term benefits and help us to meet increasingly strict EPA air emissions regulations," Evans said. "We are committed to producing electricity at a good value by controlling costs and making responsible investments."